BPF calls for regulatory certainty to ensure real estate achieves net zero by 2050

Insufficient and inaccurate building performance data available to decision-makers, combined with a lack of regulatory and policy certainty, mean the property sector is unlikely to achieve net zero by 2050, according to a survey.

In addition, nine in 10 senior leaders surveyed by the report by the British Property Federation (BPF) in partnership with JLL do not believe current government policy will deliver a net-zero property sector by 2050.

The study identifies the key challenges the property sector faces as it decarbonises and sets out a series of policy recommendations.

The most pressing challenges, according to the research are:

• Insufficient and inaccurate building performance data available to decision-makers, particularly regarding occupier energy consumption.
• A lack of regulatory and policy certainty.
• The impact of technology on energy efficiency, and the return on investment for carbon reduction measures.
• Skills and supply chain shortages.
• The lack of grid capacity for renewable energy.
• Barriers to decarbonisation caused by the planning system. Access to data is a major challenge, with property owners and occupiers referencing it as one of the top three challenges to decarbonising.

A lack of quality data makes it difficult to calculate accurate operational carbon and set realistic carbon reduction targets. Furthermore, according to BPF, policy and regulatory uncertainty and a lack of financial incentives to support the retrofitting of buildings are hindering progress towards net zero. 

Transitioning to net zero comes at a considerable cost, and without robust evidence of a return on investment, many property owners lack the confidence to invest in major energy efficiency upgrades, the report reveals.

To ensure the property sector can meet net-zero targets the BPF has set out several essential policies. These include:

• Mandate the sharing of energy consumption data between property owners and occupiers of large commercial buildings, and set up a Task Force to explore the data challenges faced by owners of residential buildings.
• Confirm urgently the detail of the planned changes to the Minimum Energy Efficient Standards (MEES) regulations for both the domestic and non-domestic private rented sectors, and the details of the proposed new performance-based energy rating system.
• Zero-rate VAT on residential repairs and maintenance and reform capital allowances to incentivise investment to decarbonise.
• Move towards the mandatory installation of PV and/or green roofs on large residential, commercial and public buildings.
• Strengthen the criteria for a green tariff label.
• Allow real estate investment trusts to invest in off-site renewables.
• Align, and resource, the planning system to enable the net zero transition.
• Mandate the use and disclosure of life-cycle assessments, and set embodied carbon reduction targets

Melanie Leech, the CEO of BPF, said: “The property sector is fully committed to decarbonisation but there are huge barriers and costs to overcome. We need clear long-term policies, regulation and incentives to support the industry’s efforts. We urge the government to adopt the policy recommendations in this report and to work with us to make sure we can deliver a net-zero built environment by 2050.”

Guy Grainger, president of BPF and global head of sustainability services and ESG at JLL, added: “There is no denying that the real estate industry is committed to net zero, with pledges being made at a global, national and local level, but these pledges need to be turned into credible action.

Without clear incentives and regulation from the government, we will continue to fall short of targets. The report highlights the insight we can garner when we collaborate and this collaboration, along with government support is critical.”

The BPF launched its Net Zero Pledge, an industry-wide initiative to cut carbon emissions across the whole of the property sector, last year. It is designed to complement and support wider sector and industry net-zero initiatives.

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